CEVAP:

The Assumptions of the Solow
Growth Model

• The economy consists of one sector
producing one good which is used for
either investment or consumption,
• It is closed economy without government,
• Since the economy is a closed one, then the
saving is equal to investment,
• The economy is always producing its
potential which is the full employment
level of output,
• In the model, the rate of technological
growth, population growth and the
depreciation rate of capital are all
determined exogenously